Claims Involving Out-of-province Insurers or Accidents (12:XIII)

A. Conflict of Law Issues

Following Tolofson v Jensen, 1994 CanLII 44 (SCC), in Canada, the substantive law to be applied in torts is the law of the place where the activity occurred, rather than the place where the action is being tried.

When foreign law applies to an action commenced in BC, unless all counsel can agree on the substantive law that applies, counsel seeking to rely on the foreign law has the burden of proof to establish the content of that law. This is often supported by expert opinion evidence in court.

1. Limitation Periods

Subsequent cases have confirmed that limitation laws are generally (but not always) substantive.

2. The assessment of damages

The court in Wong v Wei, 1999 CanLII 6635 (BCSC) drew a distinction between the availability of heads of damage, which is a matter of substantive law, and the assessment or quantification of damages, which is a matter of procedure.

B. Jurisdiction

In general, any claim will likely go through the court where the accident occurred (i.e. if the accident was in BC, it will go through the BC Provincial or BC Supreme Court).

If an accident occurs outside BC and the defendant(s) resides outside of BC, the issue of jurisdiction should be carefully examined before the limitation period expires in either jurisdiction.

Counsel should keep in mind that a plaintiff has two claims, one in tort and the other against a first party insurer for Part 7 or equivalent) benefits. The jurisdiction issue for the two claims should be considered separately.

The defendant can challenge BC court’s jurisdiction on the basis that the BC court has no jurisdiction to hear the matter at all (i.e. the court lacks jurisdiction simpliciter) or that there is a more convenient jurisdiction within which the case may be heard (i.e. the defendant argues that the BC court is forum non conveniens).

The BC court has jurisdiction simpliciter where there is a real and substantial connection between BC and the defendant or between BC and the subject matter of the action. Section 10 of Court Jurisdiction and Proceedings Transfer Act, SBC 2003 c 28 [CJPTA] lists the circumstances in which it is presumed that there is a real and substantial connection.

In situation involving parallel proceedings in two jurisdictions, it may be necessary to engage in a forum conveniens analysis to determine the most convenient jurisdiction within which to hear the matter. In determining the most efficient forum to hold the trial, a court may consider, among other things: where witnesses live; whether injury or disability makes it difficult for one party to travel; and which substantive law will apply (applying complex foreign laws in a BC court may require expensive expert witnesses to be called).

C. Out-of-province Insurers

1. Interprovincial or International Reciprocity

Each Canadian province and territory and each U.S. state has legislation governing the licensing, operation, and insurance coverage of motor vehicles. Provinces cannot regulate insurers operating outside of their borders. However, out-of-province insurers often agree to be bound by the court rules in British Columbia if their insured vehicle causes an accident by way of B.C. business authorizations (licences) or a Power of Attorney and Undertaking (“PAU”).

The Canadian Council of Insurance Regulators maintains a repository of all PAUs filed in Canada by U.S. and Canadian auto insurers. A listing of companies that have filed a PAU can be found on the CCIR’s website. A complete listing of all British Columbia and extraprovincial insurance companies that have been issued “business authorizations” in British Columbia is available from FICOM and can be downloaded from FICOM's website.

In the case of a claim made against the insured of an out-of-province insurer, PAUs or licences obligate the out-of-province insurer to:

i) file an appearance in B.C. court;
ii) not raise any coverage defence which would not be available to an insurer in B.C. respecting a B.C. insured; and
iii) pay any motor vehicle judgment against the insured up to the minimum liability limits required by B.C. (i.e. $200,000).

NOTE: Failure by an out-of-province insurer to disclose that it has signed a PAU cannot be grounds for claims of bad faith or negligence (Pearlman v American Commerce Insurance Co, 2009 BCCA 78).

2. Underinsured Motorist Protection (UMP) Entitlements

Underinsured Motorist Protection is mandatory first-party coverage provided by ICBC to compensate an insured in the case of injury or death caused by an at-fault motorist. Generally, most residents of B.C. will have access to UMP coverage as the definition of an “insured” set out at s 148.1 of the IVA includes:

(a) an occupant of a motor vehicle described in the owner's certificate,
(b) a person who is
- (i) named as the owner or renter in the owner's certificate where that person is an individual,
- (i.1) an assigned corporate driver, or
- (ii) a member of the household of a person described in subparagraph (i) or (i.1),
(b.1) a person who is
- (i) an insured as defined in section 42 and who is not in default of premium payable under section 45, or
- (ii) a member of the household of an insured described in subparagraph (i), or
(c) a person who, in the jurisdiction in which the accident occurred, is entitled to maintain an action against the underinsured motorist for damages because of the death of a person described in paragraphs (a), (b) or (b.1), and, for the purpose of the payment of compensation under this Division, includes the personal representative of a deceased insured.

If a claimant is injured in an accident caused by an individual with limited or no insurance, the IVA still provides for compensation. However, UMP coverage is coverage of last resort, and ICBC often requires a claimant to exhaust all other avenues before accessing UMP, including litigating against an at-fault motorist with limited coverage.

Under UMP, the basic coverage received is $1 million. However, excess UMP coverage to $2 million can be purchased by paying a premium on ICBC insurance.

From the UMP coverage, ICBC is entitled to make various deductions under s 148.1 of the IVR (under the definition of “deductible amount”). The deduction of a plaintiff’s other insurance entitlements can have a significant impact on the value of a legitimate claim.

3. Optional Insurance Contracts and Excess Coverage

Section 80 of IVA provides that if there is an optional insurance contract and any other vehicle insurance (none of which are identified as being issued “in excess” of the others) then each insurer is liable only for the rateable proportion of any loss, liability, or damage. For example, if Policy A provides coverage up to $100,000 and Policy B Provides coverage of $300,000 and the liability of the insured is assessed at $100,000 then Policy A would pay out $25,000 and Policy B would pay $75,000.

Policies providing coverage “in excess” will be triggered only if the limit of other insurance coverage is reached. Part 4 of the IVA regulates contracts for excess and optional insurance coverage.

There is no formal, established claims-handling protocol between ICBC and private excess auto insurers in B.C. Absent any express agreements between ICBC and the excess insurer, neither insurer has any control over the other. Therefore, the plaintiff’s counsel should not assume that ICBC is sharing all information and documents with the excess insurer.

4. Service Outside BC

a) Without a Court Order

According to Rule 4(5) of the Supreme Court Civil Rules, in any of the circumstances enumerated in s 10 of the CJPTA, the B.C. plaintiff can serve the out-of-province defendant without an order of the court.

Notable circumstances for which this is the case include:

Actions concerning a tort committed in B.C,; and
Actions concerning contractual obligations, where:
- the contractual obligations, to a substantial extent, were to be performed in B.C.; or
- by its express terms, the contract is governed by the law of B.C.

In cases where a PAU operates, the claimant need not serve the out-of-province insured directly as the PAU appoints B.C.’s Superintendent of Financial Institutions as the out-of-province insurer’s counsel to accept service for any lawsuit against the insured arising out of a motor vehicle accident that took place in B.C.

b) With Leave of the Court

The B.C. plaintiff must obtain an order for service outside B.C. if the facts of the claim do not fall within one of the recognized categories listed in s 10 of CJPTA.

VII. IMPENDING CHANGES TO ICBC AUTO INSURANCE

A. NEW ENHANCED CARE COVERAGE

On May 1, 2021, ICBC will be implementing its new Enhanced Care Coverage. The goals of the upcoming changes are:

• To reduce legal expenses and manage the increasing costs of injury claims • Increasing benefits available to customers who are injured in a crash • Setting a limit on pain and suffering payouts for minor injuries • Introducing new independent claims dispute resolution process for minor injury claims through the Civil Resolution Tribunal

See ICBC New Enhanced Care Coverage for more information.

B. CHANGING TO A FULL “NO-FAULT” INSURANCE MODEL ICBC aims to decrease the amount of its legal expense by removing the adversarial approach of suing the driver-at-fault for the accident. After implementation of the New Enhanced Care Coverage, in most cases, drivers will not be able to file a lawsuit for damages against the other driver involved in the accident. Instead, drivers will be paid directly by ICBC.

However, the exceptions are that drivers will still be able to sue the other party if the other party is also convicted of a criminal offence in relation to the accident. In addition, drivers will still retain the ability to sue vehicle and vehicle parts manufacturers in relation to accidents.

Even though ICBC is transitioning to an almost full “no-fault” system, fault will still be determined in an accident for the sole purpose of increasing the at-fault party’s insurance premium.

C. CHANGES TO PREMIUMS

ICBC is proposing an annual decrease of 20% or around $400 to the premium rate once the New Enhanced Care Coverage is implemented.

D. CHANGES TO BENEFITS

ICBC claims that with implementation of the New Enhanced Care Coverage, the injured parties will be able to receive their recovery benefits and wage loss faster. This will be due to the fact that legal action will be limited in the ICBC process. As a result, the injured parties will not have to wait years for their legal claim to be settled in order to receive that lump sum settlement.

ICBC is also increasing the maximum care and recovery allowance from the current $300,000 to $7,500,000. Treatments such as physiotherapy, occupational therapy, chiropractic, massage, dental care, counselling, and medical equipment will still be covered in the New Enhanced Care Coverage. This care coverage will apply regardless of whether the driver is responsible for at-fault for the particular accident.

See https://2021.icbc.com/more-care#everyone for more information regarding care coverage.

This information applies to British Columbia, Canada. Last reviewed for legal accuracy by the Law Students' Legal Advice Program on August 12, 2020.